Over the past decade we’ve seen increasing adoption of open source technologies, both by software companies, as part of their platform development, as well as by businesses and consumers who purchase open source products. In addition, governments and educational institutions are increasingly promoting the adoption of OS technologies.

In recent years, particularly in the start-up sector, we’ve also seen companies use what we call “Commercial Open Source” licenses. These licenses restrict the use of the software and charge consumers, yet they provide open source code access and allow companies to create derivative work.

In the wake of this rapid evolution and promotion of open source technologies, there is rampant confusion about what constitutes an “open source” project or “open source” license. The definition is important because each type has different implications about the promotion of innovation, freedom, distribution, and use of software. Our goal here is to promote a discussion on this topic and suggest an initial hypothesis.

What is open source?

It is currently accepted that in order for software to be defined as “open source” or “free” software, its license should not only allow access to the source code but also permit distribution that is free, unrestricted, and allows creation of derivative work. In order to be considered “open source” there needs to be a guaranty that openness cannot be revoked.

It is interesting to consider different licensing schemes and confront them with this definition.

Pure Open (MIT) and the like

GPL and the like

“Commercial” Open Source

Source Code is made available

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Derivative work creation permitted

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Ownership of Derivative Work

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Restrictions on redistribution of Derivative work

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No restrictions on software use and distribution

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Guaranteed public access to source code

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The GPL license (which allows source code access, free usage, and creation of derivative work, but insists that any derivative work, when redistributed, is also released under the GPL terms) is actually restrictive, as it requires redistribution of derivative work under a specific license. From an innovation standpoint, this license protects early developers from being “exploited” by others who build on their work but do not redistribute. Yet, in restricting later stage developers and preventing them from using the business models and licensing schemes of their choice, it inhibits downstream innovation. (see also a license to kill innovation).

Licenses such as the Apache License and the MIT license truly meet the broadest open source definition: they guarantee openness, allow for source code access and creation of derivatives, and they do not include meaningful restrictions that might inhibit the motivation of downstream developers (except for requiring attribution for example, which is not a real restriction).

Commercial Open Source licenses restrict usage based on $$ but provide source code access and permit derivative work. These licenses would not traditionally be considered “open source” because they restrict distribution, but they do an allow companies “to build on the shoulders of giants”, which is one of the original rationales of open source licensing. That said, under Commercial Open Source licenses, once companies develop new innovations, they cannot sell or sublicense the technology outside of the predefined commercial terms (ie. # of users, servers, etc.)

Commercial Open Source is not a broadly recognized category; however, it is an extremely interesting one from an innovation standpoint. Downstream innovators are motivated to develop derivative work. They can own it, and they can redistribute it. Still, these licenses cannot really guarantee the openness of the source code or its availability to the public. Typically the source code access in this model is subject to confidentiality.

Further analysis is needed, but thus far our hypothesis is as follows: if the key objective is to guarantee the openness and availability of the software to the public, open source licenses are the right choice. If the key objective is to promote innovation, promoting commercial open source licenses is an extremely valuable path.